There are two scenario's I'm wondering about, which would be the best way to make profit, and make sure it's legal (it sort of sounds like a pyramid scheme). Ok:

Business: E-mail system

Option A:
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10 friends are selected to be "Head Recruiters." These 10 people must sign up for our e-mail. They pay $1 / month to use it. These Head Recruiters' job is to recruit people. For each person they recruit, they will get paid 25 cents / month from the Head Admin. So if they recruit more than 4 people, they are being paid monthly to have e-mail. Now, to keep spreading customers this is what happens. Those people they recruit, are told they can make money. But the Head recruiter will be in charge of that part. So the head recruiter pays them 25 cents / month for each person this new customer recruits. This new person will pay their dollar to us directly still, but will be paid by the Head recruiter. This recruitee is told that they can tell thier recruitees can make money the same way. But the difference is, they are paid by Head Admin instead of the person who recruited them, since the person who recruited him is a recruitee, not a Head Recruiter.

So in all, Option A has a Hierarchy:
Head Admin (pays Head Recruiters)
Head Recruiters (pays recruitees)
1st level Recruitees (they do not deal money to their recruitees, but tell them to talk to Head Admin, but are paid by their Head Recruiter)
2nd level Recruitees (they do not deal money to their recruitees, but tell them to talk to Head Admin, and are paid by the Head Admin)

Option B:
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The same basic principal applies, except this is the difference. The people the Head Recruiters recruit, are told they can make money in the same manner, but they are paid by Head Admin, not the Head Recruiter. So that really makes the Head Recruiter title meaningless, since all customers will be on the same level in the hierarchy.

1) Which option seems to maximize profit?
2) Which option seems to seem the most fair?
3) Are both options legal?
4) Which option seems to be the most reliable?

11-21-2003

VirtualAce

Both sound like an MLM scam. The main problem is that we don't live in a perfect world. The recruiting chain will fall apart which will cause others to lose money. There are some stats on the internet that explain why and how MLM's make false claims. The math does not add up to what they claim it does.

Best bet for making money is invest money in a real business. I used to own a private business and its a lot more work than these scams ever tell you about.

11-21-2003

Cat

Both of these rely only on shuffling money around, and being as no value is being generated, whomever makes money makes it *only* because other people lose money.

Neither of these is a valid business plan. Both are just scams, because the business creates no value, it only moves money from one person to another.

11-22-2003

adrianxw

Typical pyramid scams. They are illegal in some countries now.

11-22-2003

ober

Sounds like a homework question to me.

11-22-2003

Felix

Why would anyone pay for e-mail :confused:

It's like those games -

CLICK ON THIS LINK

*clicks*

Superpig has just eaten you, and grown by 4 centimeter.
He'll buy a cake in 3 minutes.

BUT, as you see that there's still a cell of you alive, you become more powerful, and you can now also eat people!

CLICK HERE TO JOIN

11-22-2003

Prelude

>Why would anyone pay for e-mail :confused:
You do realize that everybody pays for email in some way or another, right?

11-22-2003

Terrance

1) Which option seems to maximize profit?

neither

2) Which option seems to seem the most fair?

neither

3) Are both options legal?

maybe

4) Which option seems to be the most reliable?

neither

I think you know where I'm going with this. :)

It's very hard to get people to invest in these pyramid schemes, and probably more so since you'd be asking them to pay for something they could get for free somewhere else on the internet.

I'm not completely trying to discourage you, but I don't think you should invest your time in something like this because it seems like you'd have to do a lot of work and you'd get back very little.

If they were offering a better product or service, maybe you should try. But then again the choice is up to you and you have little to lose.

Remember the old saying- "when a man with money meets a man with knowledge, the man with the knowledge usually ends up with the money, and the man with the money usually ends up with the knowledge."

This old saying is for people who try to invest in "get rich quick" or "pyramid schemes" like this one.

11-22-2003

Leeman_s

But, it doesn't seem like a pyramid scheme. The people who don't recruit others are the people who pay the people who DO recruit others. But it goes through the Head Admin first. And there's always going to be people who don't recruit as long as there is SOME recruitment. Basically, I make 75% of the money.

Say there are 100 people. That's $75 / mo. to me. The other $25 goes to the 1 quarter per recruitee.

Is this really a pyramid scheme? I'm upset I thought up something illegal then....

11-22-2003

Salem

> Say there are 100 people. That's $75 / mo. to me. The other $25 goes to the 1 quarter per recruitee.
As per a recent thread, pretend that the population of earth is 100 people, then see what happens when everyone is in the "scam" and you try and recruit some more people.

11-22-2003

Cat

Quote:

Originally posted by Leeman_s But, it doesn't seem like a pyramid scheme. The people who don't recruit others are the people who pay the people who DO recruit others. But it goes through the Head Admin first. And there's always going to be people who don't recruit as long as there is SOME recruitment. Basically, I make 75% of the money.

Say there are 100 people. That's $75 / mo. to me. The other $25 goes to the 1 quarter per recruitee.

Is this really a pyramid scheme? I'm upset I thought up something illegal then....

Well, it depends on how moral you are, I guess. I don't know all of the anti-scam laws, so its legality is questionable, but I do know that I personally wouldn't run a scam, for ethical reasons.

And make no mistake, it IS a scam, the people who make money (you and some of the others) only get money because most of the others lose money. A legitimate business *creates* value. For example, I am good at baking, so if I went, bought ingredients for a cake for $1, baked it, decorated it, and sold it for $5, I created $4 worth of value. I took something worth $1, and made it into something worth $5.

Or, for the service side of things, you can perform a task that is of value to someone else. E.g. a plumber does a task that is valuable to the person whose plumbing is fixed, so the plumber creates value, as well, even without having a physical product.

Your "business" creates no value, so it's not a legitimate business. A legitimate business is fair and equitable -- business transactions are exchanges of equal value (trading money for goods or services of equal value).

Would it be a scam if I selected 15 friends, and their job is to recruit. Nobody else can earn money by recruiting, only the initial 15 friends?

I don't think this is illegal first off (but it could be). Second, it's not entirely a scam. But these pyramid schemes are very difficult, have very low returns on investment (investment of time in this case), and leave a lot of people feeling scammed in the end.

If you have 15 friends who you know want to do this, then it's your decision to try. But is an extra 20-30 dollars a month for the next 3-4 months worth the risk of losing your friends.

Remember, pyramid (or multi-level marketing) schemes seem easy at first. All you have to do is recruit a few people and have them do all the work for you. But what you're not realizing is that 95% of the people you recruit (probably up to 100% actually) will quit. A lot of these people will feel scammed and be resentful of you. And you'll have to work a lot harder than you expect just to try to get more people to enter your pyramid scheme.

Anyways, I've tried something like this myself, and it doesn't make any money. The amount of time and effort put in isn't worth it, and you will have people that will dislike you.

If you have 15 people or so that really do want to try it, you can give it a shot. But remember, in all likeliness, all 15 will quit. And that will leave you looking for more people to recruit.

Again, I learned my lesson from trying something like this. The knowledge I learned was worth the amount of time I invested in it, but the money wasn't.

My suggestion is just to learn from my mistake, and not do this. But that's my suggestion.

11-22-2003

Cat

Quote:

Originally posted by Terrance Anyways, I've tried something like this myself

If you really are a Harvard MBA grad, shouldn't you be capable of starting a legitimate business, not some kind of scam?